Circle Stock Upgraded Again as Analysts Reassess USDC’s Ties to Crypto Cycles

Circle (CRCL), the stablecoin issuer behind USDC, received its second Wall Street analyst upgrade in a single week, signaling a notable shift in sentiment toward the stock. This time, the upgrade came from Compass Point analyst Ed Engel, previously Circle’s most bearish voice. Engel raised his rating from Sell to Neutral, just one day after Mizuho analyst Dan Dolev also softened his negative stance on the stock.

Despite the upgrade, Engel maintained the lowest price target among analysts covering Circle, lowering it to $60 from $75. He cited Circle’s premium valuation and ongoing exposure to crypto market cycles as key reasons for caution. Circle shares fell 7.3% during regular trading on Thursday to $67.55, before recovering slightly with a roughly 1% gain in after-hours trading.

Engel’s revised outlook reflects what he describes as a changing narrative around Circle stock. Rather than trading like a traditional fintech company, Circle increasingly behaves as a proxy for the broader crypto market. Engel originally downgraded Circle to Sell in July, pointing to rising competition in the stablecoin market. However, he now believes many of those risks have already been priced into the stock.

Regulatory developments could play a role in Circle’s future performance. Engel assigns a 60% probability to the passage of the CLARITY Act in 2026, legislation that could provide clearer regulatory guidelines for stablecoins in the U.S. Such clarity could support growth in USDC supply. Additionally, the tokenization of U.S. stocks and ETFs in decentralized finance markets, even without formal regulatory approval, may eventually help reduce Circle’s reliance on broader crypto sentiment.

Still, risks remain. Since December, USDC supply has declined by 9%, while competitors such as USDH, CASH, and PayPal’s PYUSD are gaining traction, particularly on networks like Solana and Hyperliquid. Engel also warned that Circle may guide 2026 operating expenses above current Wall Street expectations, as many investments are unlikely to generate near-term revenue.

Competition from traditional financial institutions is intensifying as well, with JPMorgan, State Street, and BNY Mellon advancing their own “deposit coins” that could challenge USDC in developed markets. While Circle could benefit from a crypto market rebound or favorable regulation, Engel concludes that its revenue remains closely tied to speculative crypto activity, making true decoupling from crypto cycles a longer-term challenge.